Illness costs employers $2 billion per year

The cost of illness to New Zealand
employers is likely to be more than $1,500 per employee, or
over $2 billion across the whole workforce, according to new
research findings[1].

Surprisingly, the research conducted
by not-for-profit health insurer Southern Cross Medical Care
Society, shows the biggest part of those costs is not
absence from work but lost productivity of employees who
still go to work when they’re sick.

Southern Cross
Health Insurance Chief Executive, Peter Tynan, says the
research sheds new light on the true cost of illness to
employers, and points to the benefits of initiatives to
enhance workforce health.

“The cost to businesses are
far greater than simply the amount of sick days taken. This
research shows that the impact on productivity when
employees come to work unwell represents a potentially
bigger cost,” he says.

The research found the average
time off work due to illness was 4.2 days per year, while
the average number of days where employees went to work when
they were too sick to be fully functioning and productive
was 11.1 days.

“If you assume an unwell employee is half
as productive as they normally would be, the cost to
employers for a staff member on the average wage is around
$900. That’s a higher average annual cost to employers
than days off work, which is around $700 per employee[2].

“Multiply those numbers by the equivalent of 1.4
million full time workers in the New Zealand workforce and
you have a $2 billion impact on productivity.”

Mr Tynan
said the research points to some Kiwi workers having
difficulty accessing affordable healthcare for longer term
health problems.

“Employees who have the most days of
absence also have the largest incidence of going to work
when they’re unwell. This suggests chronic, longer term
illnesses that in some cases might require surgery or
expensive diagnostic procedures.

“Public health system
waiting lists and the cost of private healthcare options can
represent very large barriers for low to middle income
earners. An employer providing subsidised health insurance
for staff can help break down those barriers and see a
return on their investment through chronically ill staff
returning to full productivity.”

Mr Tynan believes a
growing number of businesses are taking steps to combat
employee illness.

“More than 200,000 of Southern
Cross’840,000 members are in group schemes where the
employer pays some or all of their employees’ health
insurance premiums. And that number had been increasing
slowly but steadily in recent years.

“Southern Cross has
also been helping employers to implement health and wellness
programmes - from traditional health insurance to
health-focused seminars, and basic health checks. Many
businesses are investing in these kinds of
initiatives.”

The Southern Cross research confirmed
around two-thirds (63%) of employees are offered some health
and wellness interventions in the workplace - the most
common being flu vaccinations, workstation assessments and
stress support.

Dr Ian McPherson, Chief Executive of the
Southern Cross Healthcare Group (which incorporates the
Southern Cross health insurance business, as well as
Southern Cross Hospitals and Southern Cross Travel
Insurance) says the research findings are a wake-up call.
“This research demonstrates the big potential payoff for
our economy from preventing illness in the workforce and the
population at large.”

ENDS

1. Survey of 461 NZ
workers by tns CONVERSA in January 20092. Based
on information from Statistics NZ: average day is 7.5 hours
at an average cost of $24/hr. The cost to the employer of an
absentee day is replacement labour; while presentee days are
estimated at 50% of a full day because of reduced output.

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